(a) With respect to each project year, the director shall determine a baseline funding amount for each base year private DSH hospital that is also a project year private DSH hospital. A private hospital’s baseline funding amount shall be an amount equal to the total amount paid to the hospital for inpatient hospital services rendered to Medi-Cal beneficiaries during the 2004–05 state fiscal year, including the following Medi-Cal payments, but excluding payments received under the Medi-Cal Specialty Mental Health Services Consolidation Program:

1. (1) Base payments under the selective provider contracting program as provided for under Article 2.6 (commencing with Section 14081), or under the Medi-Cal state plan cost reimbursement system for inpatient hospital services for noncontracting hospitals.
2. (2) Emergency Services and Supplemental Payments Fund payments as provided for under Section 14085.6.
3. (3) Medi-Cal Medical Education Supplemental Payment Fund payments and Large Teaching Emphasis Hospital and Children’s Hospital Medi-Cal Medical Education Supplemental Payment Fund payments as provided for under Sections 14085.7 and 14085.8, respectively.
4. (4) Small and Rural Hospital Supplemental Payments Fund payments as provided for under Section 14085.9.
5. (5) Disproportionate share hospital payment adjustments as provided for under Section 14105.98.
6. (6) Administrative day payments as provided for under Section 51542 of Title 22 of the California Code of Regulations.

(c) With respect to each project year beginning after the 2005–06 project year, an aggregate project year private DSH hospital adjusted baseline funding amount shall be determined as follows:

1. (1) The department shall determine the aggregate total Medi-Cal revenue, using amounts determined under subdivision (a), for inpatient hospital services rendered during the 2004–05 fiscal year for project year private DSH hospitals, less the total amount of disproportionate share hospital payments identified in paragraph (5) of subdivision (a) for those hospitals.
2. (2) The department shall determine the aggregate total Medi-Cal revenue paid or payable for inpatient hospital services rendered during the fiscal year immediately preceding the project year for which the private hospital adjusted baseline funding amount is being calculated for project year private DSH hospitals. The aggregate total revenue for services rendered in the relevant preceding fiscal year shall include the payments described in paragraphs (1) and (6) of subdivision (a), and all other payments made to project year private DSH hospitals under this article, excluding disproportionate share hospital replacement payments made under Section 14166.11, stabilization funding under Section 14166.14, and distressed hospital funding under Section 14166.23 and paragraph (3) of subdivision (b) of Section 14166.20.

3. (3) The department shall:

   1. (A) Calculate the difference between the amount determined under paragraph (1) and the amount determined under paragraph (2).
   2. (B) Determine the percentage increase or decrease by dividing the difference in subparagraph (A) by the amount in paragraph (1).
   3. (C) Apply the percentage in subparagraph (B) to the amount determined under paragraph (1).
4. (4) The aggregate private DSH hospital adjusted baseline funding amount is the amount determined in paragraph (1), plus the amount determined in subparagraph (C), plus the amount in paragraph (5) of subdivision (a).